Early this morning Mitel announced an agreement to purchase ShoreTel in an all-cash deal worth about $430 million. The plan is to acquire all of ShoreTel's outstanding shares at a price of $7.50 per share, followed by a merger of the two companies. This merger will not require approval of ShoreTel's stockholders but will require a regulatory review before it can close. This is big news in the telecom industry, especially since the amount is $110 million less than what Mitel offered ShoreTel shareholders about three years ago. If approved, the merger will make "MoreTel" the 2nd largest player in the UCaaS market (Mitel + ShoreTel = MoreTel).
What Does this Mean for ShoreTel Customers?
ShoreTel has tens of thousands of customers along with millions of users on its platform. If you're reading this, you're likely one of them. What does this pending merger mean for the companies who have invested a lot of time, money, and resources in a ShoreTel system? Here are a few thoughts to consider:
- ShoreTel's software platform will be cultivated, not canned. The value of ShoreTel's offering is their next-level software tools and simplicity, so the natural conclusion would be that Mitel will want to capitalize on that value. Mitel is known for having highly reliable software, and ShoreTel is known for having very innovative, forward-thinking software, so if anything, customers should expect long-term improvements on the ShoreTel Connect platform in terms of quality and reliability. Since 2011, Mitel CEO Rich McBee has led Mitel through about half a dozen acquisitions, and the company has a clear pattern of taking the product on, supporting it, and growing it. This was especially the case with the 2007 Inter-Tel acquisition that birthed the Mitel 5000, which is still available today as an updated version of the original Inter-Tel 5000 platform. ShoreTel customers should be confident in the likelihood that Mitel will see even more value from the rapidly growing ShoreTel Connect platform, which has the unique flexibility to be utilized either on-premise or in the cloud, using the same desktop software (something Mitel's platform cannot accomplish today).
- ShoreTel's hardware portfolio will expand significantly. The other key benefit for ShoreTel customers will be the addition of Mitel's hardware to the ShoreTel product set. If Mitel follows the Inter-Tel pattern, they will make phone hardware interchangeable, allowing its end users the ability to purchase Mitel phones. ShoreTel standardizes on virtually 4 different phone models (not including the 10/100 counterparts), while Mitel has dozens of different options for physical handsets, and many of them are very feature rich and powerful. A larger variety of application-tailored handsets is something many ShoreTel customers have been missing out on for years, but this merger may very well change that.
Have you seen the New ShoreTel Connect Client?
What Does this Mean for ShoreTel Partners?
ShoreTel is a channel-centric company and has partners all around the world who are likely wondering what is next for their ShoreTel practice. We can make a few educated speculations based on Mitel's history of acquisition:
- ShoreTel's partner channel will be valued. Mitel has always remained a partner-focused company throughout all of its acquisitions. With the acquisition of ShoreTel, Mitel will have about 3,200 channel partners and a workforce of about 4,200 employees. For ShoreTel partners, an acquisition by Mitel should be a sigh of relief compared to the uncertainty of the past year and compared to an acquisition by a company like Cisco (who couldn't care less about ShoreTel's channel) or a carrier looking to enter the UCaaS market (who may not embrace the traditional VAR service model).
- ShoreTel's global reach will be extended. Something exciting about the merger is the reach that will be added for ShoreTel globally. Mitel has been better positioned in the global arena for some time, and this allows ShoreTel to take advantage of the global distribution and agreements Mitel has made. Which could all potentially speed up the global availability of ShoreTel's fast growing cloud practice, only recently launched in a few countries outside the U.S. (Canada, Australia, UK). Compare that to Mitel's World Cloud offering, which is available in more than 40 countries. As a result of the merger, ShoreTel partners will be better positioned to serve their multi-national clients.
As a local VAR who has been serving clients in the telecom industry for 30+ years, Matrix Networks is not surprised by the recent announcement. In fact, since we have a strong relationship with both ShoreTel (10 year relationship) and Mitel (33 year relationship), for us and our clients it's a win-win. If Mitel chooses to end relationships with some ShoreTel vendors, Matrix Networks enjoys a protected status as a respected dealer in both channels. We are excited to see the choice of Mitel, a channel focused organization with a long history of making robust and reliable telecom solutions, aligning well with ShoreTel's mid-market sweet spot. Mitel and ShoreTel are a strong combination that will deliver new value for clients and shareholders alike. This news doesn't change a thing for us; we will continue to be focused on providing the best possible experience for our clients whether using Mitel or ShoreTel solutions.
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Author: Tim Lopez